Amergin--I seem to recall a version that goes "The worms crawl in, the worms crawl out, they do right dress and turn about" or some such--it sounded like it was describing military parade maneuvers. With these lyrics, I could see this being an Army song.

I did a very quick search on Google, and came up with a half dozen or more variants, but not the particular one I thought I remembered. Now you've got me curious. Let us know if you find more info on this.